This move by Centene has raised concerns across the health insurance sector, particularly regarding the individual Health Insurance Marketplace.

Centene’s withdrawal of its 2025 GAAP and adjusted diluted EPS guidance stems from its initial review of 2025 industry data from Wakely, an independent actuarial firm.

Also Read: Centene Withdraws 2025 Guidance, Shares Dive

This data, covering 22 of Centene’s 29 Marketplace states and representing approximately 72% of their Marketplace membership, revealed two critical issues.

Firstly, overall market growth in these states is proving to be lower than anticipated. Secondly, and more significantly, the implied aggregate market morbidity, or the prevalence of illness, in these states is substantially higher than Centene’s original assumptions for risk adjustment revenue transfer.

This discrepancy has led Centene to estimate a preliminary reduction of approximately $1.8 billion in its full-year net risk adjustment revenue transfer expectation, which translates to an adjusted diluted EPS impact of around $2.75.

While withdrawing its comprehensive EPS guidance, Centene has reaffirmed its fiscal year 2025 adjusted EPS to be greater than $7.25, aligning with the consensus of $7.23.

It is worth noting that Centene had previously, in its first-quarter earnings release in April, raised its 2025 premium and service revenue guidance by $6 billion.

Centene now projects its 2025 premium and service revenue to be between $164 billion and $166 billion. This revised expectation is an increase from its earlier forecast of $158 billion to $160 billion.

The upward revision is attributed to two key factors: an additional $5 billion in Marketplace premium revenue, driven by stronger-than-expected enrollment during the first quarter, and an extra $1.0 billion in premium revenue due to outperformance in the Medicare Advantage annual enrollment period.

The market’s reaction, evidenced by Oscar Health’s stock being down 15%, suggests that investors are interpreting Centene’s issues as potentially indicative of broader challenges within the individual health insurance marketplace.

Price Action: OSCR stock is trading lower by 15.0% to $17.38 at last check Wednesday.

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